Standing Committee B

[Mr. Bill O'Brien in the Chair]

Proceeds of Crime Bill

Clause 324 - Failure to disclose: regulated sector

Amendment proposed [this day]: No. 488, in page 187, line 40, after 'and', insert 'believes'.—[Mr. Grieve.] 
 Question again proposed, That the amendment be made.

Dominic Grieve: This morning, I was guilty of taking the Committee off at a slight tangent. [Hon. Members: ''Hear, hear.''] The Minister might also have been guilty of that. Therefore, a few matters should perhaps be clarified.
 Apart from the definition in respect of professional legal privilege in section 10 of the Police and Criminal Evidence Act 1984 that deals with the seizure of documents, clause 324 derives from section 52 of the Drug Trafficking Act 1994, which is reproduced—almost unaltered, but with a slight variation of no importance—in subsection (8). That definition of professional legal privilege is acceptable. 
 In the light of the widening of the obligation on the professional legal adviser, the Committee must decide whether to support the amendment's introduction of a defence for the adviser, if he ''believes'' that the information or other matter came to him in privileged circumstances. 
 I believe that that defence should be introduced. Under the Drug Trafficking Offences Act 1986, someone can commit the offence of failing to disclose only if they know or suspect. The way in which clause 324 is worded, they can commit the offence if they are negligent. Because of that, the legal adviser should be given the extra safeguard that he cannot be prosecuted where he has honestly made an incorrect assessment that the information came to him in privileged circumstances. 
 I also wish to raise a further matter, which we shall return to when we discuss some later amendments. The statutory definition that is provided is not exhaustive: a glance at ''Halsbury's Laws of England'' or ''Archbold'' illustrates that this is an evolving area of the law, where definitions are not set in stone. It concerns me that a professional legal adviser who acts honestly and responsibly with a client, but who fails to make a correct assessment, could be criminalised—if, for example, he should have made a declaration to NCIS, because the information that he received did not fall within the circumstances of professional legal privilege, although he believed that they did. 
 If the Minister were to come up with an alternative, even the introduction of the word ''reasonably'', I might be prepared to consider it. In its absence, however, professional legal advisers are entitled to 
 protection, especially given that privilege does not exist to help lawyers but is a legal obligation on them. The usual way in which that legal obligation is challenged is in court proceedings. However, the irony is that a person may commit the criminal offence without the matter having previously been discussed in a court, which would decide whether the circumstances are such that the privilege has been waived or never existed in the first place.

Vera Baird: I am puzzled that the hon. Gentleman thinks that the negligence knocks on to the question of privilege. The offence, which we discussed extensively yesterday, would be negligently knowing or suspecting that money laundering was occurring. That has no bearing on privilege. The information comes to the lawyer. Whether or not he knows or believes that it relates to money laundering, he ought to do so. However, the question of whether the information that comes to him is privileged is not connected with the way in which he can be guilty of non-disclosure.
 I would have thought that privilege was a fairly clear concept, which is clearly set out. As the hon. Gentleman now realises that there is a proper definition of privilege in this and other legislation, I cannot understand the purpose of persisting with the matter.

Dominic Grieve: I am afraid that the hon. Lady does not persuade me with that argument. The problem that may confront the professional legal adviser becomes even more complicated as a result of the introduction of the possible offence committed through negligence. It is always difficult to find an example that fits exactly, but one comes to mind. A lawyer is asked to carry out a transaction for a client, and at the same time he believes that in the course of doing so he has been providing legal advice. He may not even believe that he has been given information that indicates that money laundering has taken place, but he might subsequently be convicted, first on the basis that he ought to have realised that money laundering was an issue, and secondly on the basis that he ought to have realised that his actions were not privileged, whereas he thought that they were. That seems to be a double whammy.
 The hon. Lady says that the categories are well established. I am not sure that I entirely agree with her about that. As I tried to do over lunch, one simply needs to look at some of the more recent case law on the subject to see that there is still scope for the law to evolve in that area. I had not intended to explore that issue now, as it would be better to deal with it in relation to a subsequent amendment. However, certain areas continue to be explored. I hope that the hon. Lady has understood my point.

Vera Baird: I must say that I do not understand. I cannot see a connection in relation to the circumstances in which information comes to a solicitor, whether it is privileged or not—the definition of what is privileged has survived since 1984, and is the same as it was under the previous legislation. The hon. Gentleman has not suggested ways in which it has hitherto caused difficulty. This compartment of law is fairly watertight—I do not accept what he says about its continuously evolving—
 and I cannot identify a link with the question of negligently not disclosing such information. How does the material come into the person's possession? Does it come in a privileged way or not? The test of negligence is not applied to that question because the material is either privileged or it is not.
 There was, perhaps, a tangential move by the Minister and others earlier. If a lawyer came across material that might be in a grey area of privilege, surely he would take that to his professional conduct body anonymously without disclosing the client's identity. He could set out a theoretical proposition and satisfy himself one way or the other.

Dominic Grieve: The hon. Lady may have misunderstood me—that is probably my fault. A professional legal adviser faces a potential double problem. The first question that he must ask himself is, ''Do I know or suspect that money laundering is taking place from the specific information that I have been given?'' If he considers, knows or suspects that money laundering is occurring and that he is being used for the purpose of furthering criminal conduct, no issue of privilege arises, and he tells NCIS.
 The second problem arises if the adviser does not know or suspect, but subsequent examination with the benefit of hindsight suggests that he should have had reasonable grounds to know or suspect. That subject troubled the hon. Lady and me, and it was the subject of an extensive debate. In such a case, the adviser may be sent to prison and criminalised. The question of privilege arises when considering that case. It is possible that the adviser considers that the information that came to him was privileged, and not to do with money laundering. It could be held subsequently that the information was not privileged and that the adviser should have had reasonable grounds for knowing or suspecting. 
 I stand by the fact that a professional legal adviser faces a potential double problem. We will leave one issue aside because the Committee appears to have reached a decision on keeping the negligence offence that a person ought to have known or suspected. However, it would be sensible and desirable not to criminalise and prosecute the adviser if it could be shown that he believed that information came to him in privileged circumstances, even though a subsequent examination, with the benefit of hindsight, showed that the information was not subject to legal professional privilege.

Stephen Hesford: Would that not give a criminally minded professional legal adviser a complete get-out for any time that he acted criminally? He could claim subsequently, ''I thought I was covered, although it was patently obvious that I wasn't, but I didn't realise.''

Dominic Grieve: I do not think so. As we discussed on Tuesday, a court or jury is able to find that a person knew something, although he denies that he did. An examination of surrounding circumstances ought to make it perfectly possible for a court that is faced with a solicitor who says, ''Oh well, I accept, now I look at
 it, that the information was not privileged, but at the time I considered that it was,'' to decide whether that was the case after examining the surrounding circumstances. If the court decided that it would be impossible to reach the solicitor's conclusion, it would be sure that he knew that the information was not privileged, and the solicitor would be convicted. Courts have to do that all the time when considering offences. I accept that it might make the hurdle of conviction more difficult, but I do not believe that it makes it impossible.

Vera Baird: Is the hon. Gentleman suggesting that the clause creates a separate offence: that of negligently thinking that something is privileged when it is not? It does not do that at all. Is not he mixing up two bits of the clause?

Dominic Grieve: I am always prepared to listen carefully to what the hon. Lady says, but I do not think that I am mixing them up. I am trying to follow her argument. I accept that, as matters stand, a professional legal adviser does not commit an offence if the
''Information or other matter comes to a professional legal adviser in privileged circumstances''.
 If a court were to conclude that the information did not come to him in privileged circumstances, and if he does not communicate it, he lays himself open to prosecution and conviction, even if he could show the court that he did not disclose it because he genuinely believed that he had received it in privileged circumstances. Such a person could be negligent or make a mistake and still not be able to avail himself of the Bill's protection.

Vera Baird: Does that go beyond the position for the generality of cases? Perhaps the hon. Gentleman countenances circumstances in which the information is not privileged. I cannot think how a solicitor could mistakenly think that information was privileged unless the information fell under the provisions of subsection (9)—that is, it was always intended to further a criminal purpose. I cannot countenance a case in which a solicitor would be mixed up about what was privileged.
 The basis on which information is privileged is fairly clear—let us not get into the argument about whether the law is still evolving—so it is hard to imagine a solicitor being muddled about it. It might transpire that, unknown to the solicitor, information was given to him to further a criminal purpose and he was used, although he did not appreciate it, as a pawn in a money launderer's hands. Is that any different from the generality of ways in which a solicitor can be used for all sorts of criminal purposes without realising it? The issue will be whether the police accept that he did not realise. I am not sure that the disclosure element makes the position any different from the usual one. That is why I think that the hon. Gentleman is barking up the wrong tree.

Howard Stoate: Not for the first time.

Dominic Grieve: I heard that, and I am the first to accept that in the course of the Committee I may have barked up the wrong tree on many occasions.
 I am not wholly persuaded by the hon. Lady's argument, because the provision is linked to an offence that, as we discussed on Tuesday, can be committed negligently in any event. Solicitors who carry cases are not under the obligation to run off to NCIS to declare what their clients have told them unless they know or suspect or have reasonable grounds for knowing or suspecting that another person is laundering money. If they have had the wool pulled over their eyes and are exploited by a client, as she suggests, they lose the protection of legal professional privilege and can be convicted for negligently not realising that they had reasonable grounds for knowing or suspecting.

Ian Lucas: If someone does not realise that they know or suspect that a criminal offence has been committed by the person giving instructions, they do not lose the protection of legal professional privilege. It is still there. That is correct, is it not?

Dominic Grieve: I apologise to the hon. Gentleman, but I am not sure that I follow his argument. If the professional adviser is given information and something alerts him about it, he would say, ''Goodness, that's information that makes me know or suspect that that person might have committed a criminal offence.'' However, he would then consider that the circumstances in which the information was divulged to him were such that it was covered by legal professional privilege. Although the professional may take other steps such as telling the person to go elsewhere or saying that he will not continue to act for him, he cannot and must not declare the information to NCIS. A professional legal adviser must follow such a train of thought.
 The alternative approach is that the adviser never cottons on to the fact that the information is such that he should know or suspect that money laundering is taking place. However, a court could show that he ought to have realised that, even though he honestly did not. At that stage, the professional might say, ''Well, in those circumstances, all I can say is that I also believed that I was covered by legal professional privilege.'' That is a fallback defence. I would not have pursued the amendment if we had not introduced the offence of negligence that could fall on a legal practitioner by virtue of the decision taken by the Committee on Tuesday. 
 I apologise for my lack of clarity. Perhaps too many weeks in Committee have fuddled my mind. I must accept that I would not have got into the muddle this morning if I had bothered to read the note in front of me, which said, ''Read out subsection (8)''. However, what I have described is a fallback position to protect a legal professional adviser in such circumstances. If it had not been for what happened on Tuesday, I would not be asking the Committee to agree to the amendment. It would provide a measure of protection for the legal professional adviser in those limited circumstances. I am worried about the burden that will be placed on him, including criminalising him. Surely, if he were able to pass those two tests, a reasonable person would say that he was blameless.

Paul Stinchcombe: I do not know whether I understand the hon. Gentleman's point. If the lawyer does not know or suspect that the information is of a particular quality, it will never cross his mind to question whether he received it in privileged circumstances, because he had never contemplated disclosing it. I do not think that ''believes'' would add anything to the clause.

Dominic Grieve: I understand exactly what the hon. Gentleman has said, but I disagree with him. We have spent much time compartmentalising those two matters, but in reality, when a legal professional adviser is dealing with a client, I wonder whether that compartmentalisation will take place with the clarity that the hon. Gentleman would wish. Circumstances are likely to arise in which the mere fact that the legal adviser believes that legal professional privilege applies would make it far less likely that he would then consider the earlier issue of, ''Do I know or suspect something or could someone subsequently, with the benefit of hindsight, say that I might have had reasonable grounds for knowing or suspecting?''

Paul Stinchcombe: The question whether such information came to that professional in privileged circumstances will be addressed only if he is already suspicious that it is of a quality that should be disclosed. Otherwise, he would not be taking such action. If he already knows or suspects, that means that the offence cannot be committed through negligence on the objective standard, so the hon. Gentleman's circuitous argument must be wrong.

Dominic Grieve: I disagree with the hon. Gentleman on that, because of subsection (9). One of the difficult tests to which a professional legal adviser may be subject is to ask himself what the information was given to him for. Was it given for the furthering of a criminal purpose, which would vitiate the defence of privilege? Alternatively, was it given as part of a package of information in relation to seeking legal advice, in respect of which he has an absolute duty to protect the client?
 I accept that the hon. Gentleman has a good point, but one of the problems is breaking down into narrow compartments a process that is by no means clear-cut, in terms of the way in which information is communicated to the professional legal adviser, what he has to do with it, or the circumstances in which he receives it. Other questions are whether it is being given to him for the purpose of general legal advice, or whether it might have been given to him in circumstances such that he might subsequently ask himself whether information was being sought from him that he should not have given. Some of those circumstances might be difficult, which is why the Committee should consider the extra layer of the defence of reasonably believing—or believing—that the information was privileged. 
 I appreciate the hon. Gentleman's point. In a perfect world, in which everyone carries out a perfect analysis, such problems might not occur. However, when one considers the diversity of circumstances in which professional legal advisers are called on to provide advice—which often may appear to be a million miles from money laundering—I wonder 
 whether there is a not a risk that we are exposing them unwittingly, when they are morally blameless, to serious penalties and criticism when they have acted with integrity throughout. The amendment has been tabled because the Committee did not remove the negligence offence on Tuesday. 
 I stand by the view that this is a complicated question. The surrounding circumstances are likely to be such that it would be easy for a professional legal adviser to be lulled into a sense that the matter that he was considering did not fall anywhere near money laundering. With hindsight, however, it might turn out that it did.

Stephen Hesford: The hon. Gentleman may recall from an earlier debate that the Minister made the point, with which the Committee agreed, that part of the reason for this part of the Bill was to force the regulated sector to get its act together in terms of regulation. If that is right, and a laudable thing to do, it would be incumbent on a firm employing a legal adviser, knowing that the legislation had been passed, to ensure, in every case, that it knew the circumstances under which professional legal privilege was or was not being operated. It would not just be a question of sitting in a turret somewhere with a half-baked notion that one had legal professional privilege—one would be under a duty to inform oneself properly.

Dominic Grieve: I take the hon. Gentleman's point, and I do not disagree with him. I hope that those who provide legal advice will, after the passing of this legislation—as I hope they were doing before—try to consider, on every occasion, whether they have duties. However, one must distinguish between the professional legal adviser and other people caught under the clause. It is true that all sorts of people have a duty of confidence to clients, but the professional legal adviser has a duty, enshrined in legal professional privilege, that extends further than that. That became clear this morning when the Minister effectively said, ''If in doubt, tell NCIS.'' That might be a good rule for an accountant, but it cannot be followed by a professional legal adviser, because if he were to tell NCIS something that was covered by privilege, he would be guilty of serious professional misconduct. That is why the extra protection would be helpful to him.

Vera Baird: Does the hon. Gentleman agree that the protection for the lawyer that is contained in clause 327 does not cover the mischief that might be caused? A client's information might be wrongly given out. In that case, the innocent client has been done an injustice that cannot be rectified. Although the lawyer is protected under clause 327, the injustice cannot be undone.

Dominic Grieve: I agree with that.
 I do not wish to trot out platitudes, but the legal professional privilege exists for what have for centuries—which is a very long time—been considered sound public policy reasons, so it is particularly important that those who operate under 
 its constraints should have adequate protection from legislation that might criminalise them when they are morally blameless. That is why I commend the amendment to the Committee. 
 If, at a later stage of our scrutiny of the Bill, the Minister were to table an amendment that went some way towards meeting my concerns, I would be the happiest person in the world. However, at present, I wish to press my amendment to a Division. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 5, Noes 14.

Question accordingly negatived.

Dominic Grieve: I beg to move amendment No. 489, in page 187, line 41, at end insert—
'(c) he is a tax adviser and the information or other matter came to him in relevant circumstances.'.

Bill O'Brien: With this it will be convenient to take the following amendments: No. 496, in page 188, line 18, at end insert—
'(8A) Information or other matter comes to a tax adviser in relevant circumstances if it is communicated or given to him— 
 (a) by a person to whom he is giving, or may be asked to give, advice on any matter relating to tax, or 
 (b) by a representative of such a person.'.
 No. 497, in page 188, line 19, leave out 'subsection (8) does' and insert 'subsections (8) and (8A) do'. 
 No. 498, in clause 325, page 188, line 39, after 'adviser', insert 'or tax adviser'. 
 No. 499, in page 188, line 45, at end insert— 
'(c) to (or to a representative of) a client of the tax adviser in connection with the giving by the adviser of tax advice to the client.'.
 No. 511, in Clause 329, page 191, line 33, at end add— 
'(12) ''Tax adviser'' means a professional who mainly and independently gives tax advice. 
 (13) ''Tax advice'' means the preparation and submission of tax returns, advice on tax planning, representation and defence of taxpayers before authorities and courts and the provision of overall advice in the area of taxation and complementary accounting and legal services. 
 (14) ''Tax'' means any form of taxation imposed by the laws of the United Kingdom or of another territory outside the United Kingdom.'.

Dominic Grieve: This is a probing amendment. I will not seek to press it to a Division, but I wish to hear the Minister's views about a problem that was raised by those who provide tax advice.
 The amendments would extend professional legal privilege to a category of individual that has not hitherto enjoyed it. As a lawyer, it is perhaps my duty to try to do that—and it certainly appears to be my duty to ask the Committee to consider the matter. 
 The issue is simple. Members of the Chartered Institute of Taxation have serious concerns about aspects of the legislation. In particular, they are concerned that it will make it difficult for them to provide tax advice to clients, because it will be incumbent on them to notify NCIS if any information is communicated to them that might give rise to a suspicion that money laundering has taken place. 
 In a sense, that ties in with our earlier amendment about Hansard agreements. In the process of obtaining the Hansard agreement, the tax adviser may receive information that may lead him to think that NSIS should be notified. That is the same issue, but approached from a different angle. Let us suppose that a person is a tax adviser and the information or other matter comes to him in relevant circumstances and is communicated to him to obtain advice on a tax-related matter. Under the amendment, he would not commit an offence if he had not made a disclosure, albeit that the purpose of a disclosure would be such that he could notify the Inland Revenue to clear up his client's tax problems. I should be interested to hear the Minister's views so that the Committee will know the Government's attitude to the representations that they have received and why they consider that our proposals are not acceptable.

Bob Ainsworth: The Bill is drafted in line with the precedent set under existing legislation. There is a legal privilege exemption under the clause whereby a professional legal adviser is not required to report his knowledge or suspicions that another person is engaged in money laundering if the information on which such knowledge or suspicion is based comes to him in privileged circumstances. That is set out more extensively under subsection (8).
 The amendments are not desirable. Legal privilege is a well-established concept, the purpose of which is to protect the integrity of the legal system and the rights of individuals involved in legal proceedings. Legal privilege is therefore a special case and we are not persuaded of the case for an extension favoured by the hon. Gentleman. The usual functions of tax advisers will not fall within the regulated sector until after the implementation of the second European Community money laundering directive into United Kingdom law. Such advisers are not therefore currently subject to the money laundering regime under the Bill, except to the extent that they engage in regulated activities. 
 However, when the new directive is adopted, we intend that an order will be made under part 3 of schedule 6 to extend the definition of regulated activities under part 1 of the schedule, so that accountants and tax advisers will be caught by the clause. We expect the directive to be adopted early this year; it must then be implemented under United Kingdom law within 18 months. We are aware that the current draft of the directive contains a discretionary 
 provision that allows member states to extend legal privilege to accountants and tax advisers, giving advice to clients on their legal position under tax law. As the recital to the directive makes clear, that exemption is available only for directly comparable services. It was introduced because, in some European Union countries, accountants can represent their clients in a court of law and it was felt that, in those circumstances, they should be placed on the same basis and on the same footing as the legal profession. 
 We have considered the issue, but our thinking is not to take advantage of the discretionary provision. It would weaken the current requirements on UK professionals. We must bear in mind that tax advisers are among the front-line detectors of money laundering, and we do not want to do anything that would impact adversely on their responsibilities for that. 
 That is the Government's position. As the hon. Gentleman said, we have received representations and given thought to the provision. We do not think that the situation applies to our legal system in the way that it does in some European Union countries. We maintain our position, and I ask him to reconsider the amendment.

Dominic Grieve: I thank the Minister for his comments.
 There is the slightest irony that at the time when successive Governments have, perhaps rightly, eroded the legal profession's monopoly on representation—we do not know quite where that will end up—we should keep legal professional privilege tied so closely to solicitors and barristers. I would not be doing my job properly if I did not indicate that I foresee circumstances in which one might end up with representation occurring before tribunals, which are not conducted by solicitors or barristers. That might happen sooner rather than later, and my profession might not welcome it. However, the Government should keep the matter under review. 
 I was interested to hear that accountants may represent their clients before certain courts in other European countries. I am not sure who is entitled to appear in a representative capacity before Inland Revenue commissioners. The Minister may know the answer, but I do not. I know that accountants may prepare cases for presentation before the Inland Revenue commissioners, but do they have any right to appear in front of them? Can the Minister answer that before the conclusion of our proceedings?

Norman Baker: I am following the hon. Gentleman's comments with interest. Does he agree that the legislation would be best framed to ensure that it deals with the functions and individual discharges that are covered on any particular occasion, rather than the normal description that is applied to an individual?

Dominic Grieve: The hon. Gentleman makes a good point. Of course, over the past 15 years, the barriers between solicitors and barristers have broken down considerably. On the whole, that commended itself to Labour Members and to some Conservative Members, if not to members of my own profession.
 It has become apparent that is possible to see a solicitor or accountant for legal advice on tax matters. Indeed, some might argue that one would be better off getting legal advice on specialist tax matters directly from an accountant. There are issues of direct professional access to the tax Bar, which need not be done through solicitors. 
 However, there is little doubt that a consequence of the Bill is that any person who wants legal advice on a tax matter will be well advised to see solicitors and barristers, rather than discussing the matter with their accountant. That is especially the case if the person thinks that they might fall foul of the law if they did not follow the advice. Unfortunately, that situation is not unknown. 
 The Minister explained the Government's view. Oddly enough, that might have the unintended consequence of helping people in my profession, especially specialist tax barristers—there are not many of them—and solicitors at the expense of accountants and tax advisers in this discrete area. That is contrary to some of the long-term trends that have developed in this country, which, apparently, have been welcomed. 
 In light of that, I wonder whether the Minister will think about the issue. As I have said, this is a probing amendment. I am offering, on behalf of my profession, to give something away—that is something that we are usually accused of being unwilling to do. I believe that the issue should be considered.

Ian Davidson: Can we clarify whether the hon. Gentleman is speaking on behalf of his profession or the Opposition? Was he elected to Parliament on behalf of his profession or his party?

Bill O'Brien: Order. We do not want to enter into that subject.

Dominic Grieve: I take the hon. Gentleman's question as an indication of his complete failure to understand what I was saying. I serve on the Committee to argue points on behalf of the public and my constituents and according to my conscience. I also bring my experiences to bear, just as he and all Members of the House do.
 I am certainly not arguing on behalf of my profession. For all I know, the Bar Council might be horrified to hear my argument. I do not know what the Law Society would think about it. The issue was raised by the Chartered Institute of Taxation, who are linked to neither the Law Society nor the Criminal Bar Association of England and Wales—or the Scottish branches of the profession, for that matter. It is not an argument that favours the legal profession commercially. If the amendment were accepted, one might see a further removal of specialist tax work away from the legal profession towards specialist accountants. 
 The hon. Member for Glasgow, Pollok (Mr. Davidson) has got the wrong end of the stick. I am making the argument because I could see that the 
 Chartered Institute of Taxation has a point. It will be more difficult for it to provide specialist tax advice under the new regime, because although it does an effectively identical job to that done by a solicitor, who provides the same advice, a solicitor will be subject to legal professional privilege protection, whereas the Chartered Institution of Taxation will not enjoy it. For that reason, the Minister may wish to consider whether that aspect should be reviewed. I shall not take up any more of the Committee's time. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Amendment proposed: No. 520, in page 187, line 41, at end insert— 
'(c) the amount of money involved does not exceed £1,000'.—[Mr. Grieve.]
 Question put, That the amendment be made:—
The Committee divided: Ayes 5, Noes 13.

Question accordingly negatived.

Dominic Grieve: I beg to move amendment No. 490, in page 187, line 42, leave out subsection (6).
 I need not trouble the Committee with the amendment, but the Minister may wish to amplify some of his previous remarks. The amendment was designed to be probing. It was intended to elicit details from the Minister about the guidance that might be provided by the supervisory authority for the benefit of practitioners. I am the first to accept that, during a debate on Tuesday, the Minister provided relevant details. However, I would be much happier if the Committee could have as much detail as possible. If the Minister has additional information, which will help the Committee to understand how the guidance mechanism will work, I should be grateful to hear it. However, I do not want to trouble the Committee further. The amendment is probing, and, subject to hearing the Minister's comments, I shall withdraw it. It was never my purpose or intention to lose the advantage that comes from having guidance published.

Bob Ainsworth: That was a helpful contribution. I shall therefore try to satisfy the hon. Gentleman.
 As I explained, since 1990, guidance notes on money laundering have been issued to the regulated institutions by the industry's joint money laundering steering group, which includes representatives from all the leading trade associations of the UK financial industry. Clause 324 recognises the potential value of that guidance. The guidance that the court will consider must be issued by the supervisory authority 
 or another appropriate body, approved by the Treasury and published in the appropriate manner, so that it can be brought to the attention of the people affected by it. A list of the supervisory authorities will be found in part 2 of schedule 6. The appropriate body is defined in subsection (11). The Treasury will approve the guidance in its capacity as the Government Department with overall lead responsibility for money laundering policy in the regulated sector. It is important to note that the guidance provided for in subsection (6) is intended to be a comprehensive document, which should explain the new responsibilities in full. 
 All practitioners should be familiar with the guidance notes, which are expected to include a definition of the term ''reasonable grounds'' and examples of situations in which it would be appropriate to report. The existence of guidance notes will provide additional security for those working in the regulated sector. It would be reasonable to expect that if employees had followed the guidance, and did not know or suspect that money laundering was taking place, they would not be convicted of a failure to report such an offence. The guidance will be approved formally by Ministers so that it has the necessary status for use in court proceedings. 
 However, industry input will be vital in ensuring that practical concerns are effectively met. The notes will therefore be written, as before, by the body set up by the industry. The guidance will then be submitted to the new money laundering advisory committee, which, it is anticipated, will meet for the first time in April this year. That committee will offer recommendations to Ministers before final approval. I hope that that amplifies my earlier comments.

Dominic Grieve: I am grateful to the Minister for his comments, which are helpful. I note that he said that if somebody had followed the guidance, and did not know or suspect, he would not be prosecuted. That may provide a measure of reassurance, although, as the Minister will realise, it does not persuade me on the main issue in relation to negligence and clause 324. However, I am grateful to the Minister for having placed his comments on the record, which amplify slightly some of the remarks that he made on Tuesday. I therefore beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Dominic Grieve: I beg to move amendment No. 491, in page 188, line 6, leave out 'employer' and insert—
'place of work'.

Bill O'Brien: With this it will be convenient to take the following: Amendment No. 100, in page 188, line 6, after 'employer', insert—
'or, as the case may be, his firm, company or voluntary organisation.'.
 Amendment No. 492, in page 188, line 8, leave out 'employment' and insert— 
'work'.
 Amendment No. 493, in page 188, line 8, after 'employment', insert— 
'or, as the case may be, his activity with the firm, company or voluntary organisation'.
 Amendment No. 494, in page 188, line 9, leave out 'employer' and insert— 
'place of work'.
 Amendment No. 495, in page 188, line 9, after 'employer', insert— 
'or, as the case may be, his firm, company or voluntary organisation'.
 Amendment No. 501, in clause 327, page 189, line 29, after 'employer', insert— 
'or, as the case may be, his firm, company or voluntary organisation'.
 Amendment No. 502, in page 189, line 31, after 'employment', insert— 
'or, as the case may be, his activity with the firm, company or voluntary organisation'.
 Amendment No. 503, in page 189, line 32, after 'employer', insert— 
'or, as the case may be, his firm, company or voluntary organisation'.
 Amendment No. 506, in clause 328, page 190, line 15, after 'employer', insert— 
'or, as the case may be, his firm, company or voluntary organisation'.
 Amendment No. 507, in page 190, line 17, after 'employment', insert— 
'or, as the case may be, his activity with the firm, company or voluntary organisation'.
 Amendment No. 508, in page 190, line 18, after 'employer', insert— 
'or, as the case may be, his firm, company or voluntary organisation'.
 Government amendments Nos. 512 to 514.

Dominic Grieve: This group of amendments deals with an issue not of principle, but of good practice. I hope therefore that the Opposition amendments will commend themselves to the Government. Under the clause, a person is protected if he makes a disclosure to a nominated officer as soon as possible after the information comes to him. It states:
''A disclosure to a nominated officer is a disclosure which—
(a) is made to a person nominated by the alleged offender's employer to receive disclosures under this section, and
(b) is made in the course of the alleged offender's employment and in accordance with the procedure established by the employer for the purpose.''
 Both those paragraphs presuppose that a person is an employee within an organisation. However, there are several types of organisation that may have a nominated officer, without there necessarily being a relationship of employer to employee within that organisation. That is why I have tabled the amendments. 
 Amendments Nos. 491 and 100 are the most important, because the others are consequential. Amendment No. 491 would leave out the word ''employer'' and replace it with the phrase ''place of work''. Under amendment No. 100, after ''employer'' would be inserted: 
''or, as the case may be, his firm, company or voluntary organisation.''

Paul Stinchcombe: Is the hon. Gentleman's concern met by Government amendment No. 514?

Dominic Grieve: Yes, that would go some way to meeting my worry—although I would have been interested to see the Government's amendment earlier. My amendment was tabled before the Minister's amendment, so I do not see why I should not move mine and speak to it. There may be common ground between us. We must deal with voluntary organisations and partnerships, because they have not been adequately covered. Mindful of the fact that, as I said, my amendment was tabled before his, I await the Minister's response.

Mark Field: I suspect that there will be a blossoming of consensus on this matter—if not on my hon. Friend's amendment, perhaps on the Government's amendment.
 One fact that we must bear firmly in mind, particularly with the fast growing array of independent financial advisors, is that many of them are either self-employed or employed in a network consultancy arrangement. Therefore, it is important to find the right form of words with regard to nominated officers. I suspect that when the Bill is enacted, and the full implications of the money-laundering provisions are made clear to the financial services profession, some sort of network will have to be put in place to accommodate new and complex forms of employment. 
 We must be more imaginative, so that we can address more modern work environments than those of traditionally organised firms and partnerships. The world of employment is changing fast, and it is clear that networks will be put in place to ensure that nominated officers can be appointed, even if they are not employees or employers—or have no direct working relationship at all with individuals who might fall foul of the provisions.

Bob Ainsworth: In principle, I agree that the legislation could be improved by allowing for internal reporting to a nominated officer by employers as well as employees, and by providing for immunity from any legal or other proceedings relating to disclosure where a report is made voluntarily. We have met several organisations that have expressed concerns about Part 7, and we have also received representations. I have already indicated that I would table amendments to deal with those concerns—and in response to the little comment by the hon. Member for Beaconsfield, may I add that although he may have tabled his amendment first, we may have thought of ours first?
 The Opposition's amendments are commendable, but they fail to achieve what the industry is looking for. With regard to reports to a nominated officer, it appears that the amendments that relate to a firm, company or voluntary organisation might exclude some of the sort of bodies that we want to include, and 
 on the immunity point, further adjustments would be necessary to clause 327 to cast the immunity wider than the regulated sector. Therefore, the Government have tabled three amendments that offer a more effective means of answering the industry's concerns. 
 Amendments Nos. 512 and 513 provide protection from charges of breach of confidence if a person outside the regulated sector reports suspicions of money laundering. Amendment No. 514 addresses internal reporting, and will allow employers as well as employees to report to a nominated officer within a firm, company or voluntary organisation. 
 Amendments Nos. 512 and 513 remove the references to the regulated sector in clause 327, so that the protected disclosure provision would no longer apply only to those conducting a business in the regulated sector. Instead, the amendments extend it to cover information that came to someone in the course of their 
''trade, profession, business or employment.''
 That is intended to cover those who exercise their profession in a voluntary capacity, such as solicitors working in law centres, or accountants giving free advice for organisations such as TaxAid. However, it would not catch professionals who were doing voluntary work unrelated to their profession. 
 Amendment No. 514, which inserts new subsection (10A) into clause 329, has the effect of applying the protected disclosures provision to people who are not technically employees, but who exercise functions for an organisation in which there is some sort of nominated officer scheme in place. That means that directors, volunteers, partners in traditional firms and members of limited liability partnerships will all be able to make a report to a nominated officer, if their organisation has one. 
 Because amendment No. 514 applies to the whole of part 7, and clarifies what is meant by references to employers and employment, non-employees can report to a nominated officer in all three of the situations envisaged under part 7 in order to avoid committing one of the principal money laundering offences, in order to avoid committing the failure to disclose offence and voluntarily with the protection offered under the clause. 
 When such a report is made to a nominated officer, the onus will fall on him to make the report to a constable, if he thinks it appropriate. Therefore, if the transaction is in the regulated sector, the liability for the failure to report an offence under the clause will be transferred to the nominated officer. If the transaction is outside the regulated sector and a report is made voluntarily or in order to avoid committing one of the principal money-laundering offences, under clause 322, the nominated officer could be guilty of becoming concerned in an arrangement that facilitates money laundering if he does not take appropriate action. 
 We consider that we have dealt in a wider way with part 7 and with the worries that have been expressed by the industry—the same worries that the hon. Member for Beaconsfield (Mr. Grieve) has mentioned. I commend the Government's 
 amendments to the Committee, and ask the hon. Gentleman to reconsider his amendments.

Dominic Grieve: I am grateful to the Minister for what he has said. He has made this clear, but will he confirm that the change from the regulated sector to any trade or profession does not place a greater burden in terms of failure to disclose on individuals outside the regulated sector? I see his officials nodding. He will be aware that, under the Drug Trafficking Offences Act 1986, the duty to disclose extends precisely to that category of people who can make a protected disclosure.

Bob Ainsworth: I suppose that, for the sake of the Hansard report, I had better confirm those nods.

Dominic Grieve: In that case, the Minister will not be surprised to know that we do not intend to oppose the Government amendments. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 324 ordered to stand part of the Bill.

Schedule 6 - Regulated sector and

Bob Ainsworth: I beg to move amendment No. 515, in page 265, line 3, leave out from beginning to end of line 43 on page 266 and insert—
'Part 1 
 Regulated sector 
 Business in the regulated sector 
 1 (1) A business is in the regulated sector to the extent that it engages in any of the following activities— 
 (a) accepting deposits by a person with permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to accept deposits (including, in the case of a building society, the raising of money from members of the society by the issue of shares); 
 (b) the business of the National Savings Bank; 
 (c) business carried on by a credit union; 
 (d) any home-regulated activity carried on by a European institution in respect of which the establishment conditions in paragraph 13 of Schedule 3 to the Financial Services and Markets Act 2000 (c. 8), or the service conditions in paragraph 14 of that Schedule, are satisfied; 
 (e) any activity carried on for the purpose of raising money authorised to be raised under the National Loans Act 1968 (c.13) under the auspices of the Director of Savings; 
 (f) the activity of operating a bureau de change, transmitting money (or any representation of monetary value) by any means or cashing cheques which are made payable to customers; 
 (g) any activity falling within sub-paragraph (2); 
 (h) any of the activities in points 1 to 12 or 14 of Annex 1 to the Banking Consolidation Directive, ignoring an activity described in any of sub-paragraphs (a) to (g) above; 
 (i) business which consists of effecting or carrying out contracts of long term insurance by a person who has received official authorisation pursuant to Article 6 or 27 of the First Life Directive. 
 (2) An activity falls within this sub-paragraph if it constitutes any of the following kinds of regulated activity in the United Kingdom— 
 (a) dealing in investments as principal or as agent; 
 (b) arranging deals in investments; 
 (c) managing investments; 
 (d) safeguarding and administering investments; 
 (e) sending dematerialised instructions; 
 (f) establishing (and taking other steps in relation to) collective investment schemes; 
 (g) advising on investments. 
 (3) Paragraphs (a) and (i) of sub-paragraph (1) and sub-paragraph (2) must be read with section 22 of the Financial Services and Markets Act 2000 (c. 8), any relevant order under that section and Schedule 2 to that Act. 
 2 (1) This paragraph has effect for the purposes of paragraph 1 
 (2) ''Building society'' has the meaning given by the Building Societies Act 1986. 
 (3) ''Credit union'' has the meaning given by the Credit Unions Act 1979 (c. 34) or the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)). 
 (4) ''European institution'' means an EEA firm of the kind mentioned in paragraph 5(b) or (c) of Schedule 3 to the Financial Services and Markets Act 2000 (c. 8) which qualifies for authorisation for the purposes of that Act under paragraph 12 of that Schedule. 
 (5) ''Home-regulated activity'' in relation to a European institution, means an activity— 
 (a) which is specified in Annex 1 to the Banking Consolidation Directive and in respect of which a supervisory authority in the home State of the institution has regulatory functions, and 
 (b) if the institution is an EEA firm of the kind mentioned in paragraph 5(c) of Schedule 3 to the Financial Services and Markets Act 2000 (c. 8), which the institution carries on in its home State. 
 (6) ''Home State'', in relation to a person incorporated in or formed under the law of another member State, means that State. 
 (7) The Banking Consolidation Directive is the Directive of the European Parliament and Council relating to the taking up and pursuit of the business of credit institutions (No. 2000/12 EC). 
 (8) The First Life Directive is the First Council Directive on the co-ordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct life assurance (No. 79/267/EEC). 
 Excluded activities 
 3 A business is not in the regulated sector to the extent that it engages in any of the following activities— 
 (a) the issue of withdrawable share capital within the limit set by section 6 of the Industrial and Provident Societies Act 1965 by a society registered under that Act; 
 (b) the acceptance of deposits from the public within the limit set by section 7(3) of that Act by such a society; 
 (c) the issue of withdrawable share capital within the limit set by section 6 of the Industrial and Provident Societies Act (Northern Ireland) 1969 by a society registered under that Act; 
 (d) the acceptance of deposits from the public within the limit set by section 7(3) of that Act by such a society; 
 (e) activities carried on by the Bank of England; 
 (f) any activity in respect of which an exemption order under section 38 of the Financial Services and Markets Act 2000 (c. 8) has effect if it is carried on by a person who is for the time being specified in the order or falls within a class of persons so specified. 
 Part 2 
 Supervisory authorities 
 4 (1) Each of the following is a supervisory authority— 
 (a) the Bank of England; 
 (b) the Financial Services Authority; 
 (c) the Council of Lloyd's; 
 (d) the Director General of Fair Trading; 
 (e) a body which is a designated professional body for the purposes of Part 20 of the Financial Services and Markets Act 2000 (c. 8). 
 (2) The Secretary of State is also a supervisory authority in the exercise, in relation to a person carrying on a business in the regulated sector, of his functions under the enactments relating to companies or insolvency or under the Financial Services and Markets Act 2000 (c. 8). 
 (3) The Treasury are also a supervisory authority in the exercise, in relation to a person carrying on a business in the regulated sector, of their functions under the enactments relating to companies or insolvency or under the Financial Services and Markets Act 2000 (c. 8).'.
 The amendment would bring schedule 6 into line with the amendments that have been made to the Money Laundering Regulations 1993, as a result of the coming into force of the Financial Services and Markets Act 2000. The relevant amendments to the regulations were made formally on 9 November 2001 and are contained in the Money Laundering Regulations 2001. 
 Our policy is that the definition of a 
''business in the regulated sector''
 under the Bill should be the same as that under the money laundering regulations, so that the same group of people will have obligations relating to money laundering imposed on them. Members of the Committee will have noticed that the text that the amendment would substitute is the same as parts 1 and 2 of the schedule 3A that was inserted into the Terrorism Act 2000 by paragraph 5(6) of schedule 2 to the Anti-terrorism, Crime and Security Act 2001.

David Wilshire: May I briefly seek your guidance, Mr. O'Brien? I wish to raise three matters, all of which I think may sensibly be debated in a stand part debate, but one of which relates to the amendment. It would be easier for me to raise all my points in a stand part debate, even though one refers to the amendment.

Bill O'Brien: The amendment as outlined covers nearly everything in the schedule. Does the hon. Gentleman want to raise anything arising from the amendment?

David Wilshire: If you want me to take them separately, I shall be brief, Mr. O'Brien.
 New paragraph 1(1)(h), which the amendment would insert, does not change the wording that caused me concern in the original draft. As I said, this could be a matter to be debated on stand part. New paragraph 1(1)(h) contains the words: 
''ignoring an activity described in any of sub-paragraphs (a) to (g)''.
 It is worth asking the Minister why the Government should want to ignore something. That wording makes me a bit nervous. I have no disagreement with the attempt to set out what the regulated sector is and listing its activities; that is eminently sensible. However, we cannot allow certain activities to be ignored without explanation.

Bob Ainsworth: We are not ignoring those activities. We are trying to make certain that they are not duplicated. Those that are picked up in other parts of
 the schedule are not double-counted. That is the only effect of new paragraph 1(1)(h).
 Amendment agreed to. 
 Question proposed, That this schedule, as amended, be the Sixth schedule to the Bill.

David Wilshire: With hindsight, the second of my queries could just as well have been raised in discussion on the amendment, but I shall raise it now as a substantive matter. Paragraph 3, headed ''Excluded activities'', contains sub-paragraph (e), which mentions
''activities carried on by the Bank of England''.
 I am neither a lawyer nor a financial expert—

Bill O'Brien: Order. I must draw the hon. Gentleman's attention to the fact that we are now discussing an amendment that has been approved. I consider it out of order to start a discussion on it again.

David Wilshire: I was simply seeking clarification of the schedule as it now stands. I hope that you will allow me to ask why the activities carried out by the Bank of England—

Bill O'Brien: Order. I advised the hon. Gentleman when we were discussing the amendment that it would be better to discuss the issues under the appropriate amendment. The question that he was going to put to the Minister would have opened up the debate again, and that is not in the best interests of the Committee.

David Wilshire: I understand exactly what you say, Mr. O'Brien. Clearly, I must accept what you say. I simply register that it seems reasonable to me to have a stand part discussion. However, there will be other opportunities to raise that point, no doubt.
 The last of my points, which is not covered by the Government amendment, relates to part 3 of the schedule, which we did not amend. It is entitled, ''Power to amend'', and it seems appropriate to consider it. It states: 
''The Treasury may by order amend Part 1 or 2 of this Schedule.''
 We should not let that pass without asking the Minister what the Government have in mind. Why does the Treasury need the power? We are discussing things of importance such as draconian penalties and the reservations that my hon. Friend the Member for Beaconsfield has been, rightly, considering for a long time. If they are so important, why should we allow the procedure to happen by order rather than by allowing the House to consider legislation to amend the schedule? Why does the Treasury need the power in this way? I am no expert on parliamentary procedure, but will the order be made under the affirmative or the negative procedure? We need that information.

Bob Ainsworth: Part 3 of schedule 6 contains the order-making power about which the hon. Gentleman is worried. The Treasury may use it to amend the definitions in parts 1 and 2. That could be used to keep the scope of the legislation in line with future extensions of regulations to other sectors that are not currently regulated. The provision will be used when
 we get to grips with the second European money laundering directive—I mentioned this in the previous debate—which will extend the money laundering regime to accountants and tax advisers. We will need order-making powers to amend the regulations because other pieces of legislation may impact on the Bill. That is not unusual, and the hon. Gentleman knows that.

David Wilshire: I would be grateful if the Minister would tell us whether the procedure would be affirmative or negative.

Bob Ainsworth: I apologise to the hon. Gentleman. I think that the negative procedure would be appropriate.
 Schedule 6, as amended, agreed to. 
 Clauses 325 and 326 ordered to stand part of the Bill.

Clause 327 - Protected disclosures

Amendments made: No. 512, in page 189, line 19, leave out 'a business in the regulated sector' and insert— 
'his trade, profession, business or employment'.
 No. 513, in page 189, line 33, leave out subsection (6).—[Mr. Bob Ainsworth.] 
 Clause 327, as amended, ordered to stand part of the Bill.

Clause 328 - Authorised disclosures

Dominic Grieve: I beg to move amendment No. 522, in page 190, line 2, leave out from 'act' to end of line 4.
 This is a probing amendment that is designed to allow us to discuss the mechanisms through which consent is provided to enable a transaction to proceed. I am the first to accept that it does not make a great deal of sense in its purest form. The deletion of that part of the line would not add anything to the Bill and would look odd in the absence of further amendments. 
 The Minister may recollect that when we first discussed money laundering and part 7 we talked about professionals' problems under the existing system, such as being told whether they may go ahead with a transaction. Let me give the Committee some illustrations. Before I do so, however, I shall emphasise to the Committee what the clause is about. 
 Clause 328 provides for a system of authorised disclosure. It therefore requires that the individual concerned should make the disclosure to a constable, Customs officer or nominated officer, that the disclosure should be made before the alleged offender does the prohibited act, and that thereafter the solicitor, banker or whoever it may be does the act with the consent of a constable, Customs officer or nominated officer, as the case may be. On paper, that looks straightforward. A solicitor who is faced with the prospect of carrying out a conveyancing operation for a client, when he has reason to suspect that the money being brought into the country might have a tainted origin, rings up NCIS and says, ''Mr. Bloggs has come in to see me. He wants to carry out a 
 conveyance for the purchase of a property for £2 million on Wednesday. I am tipping you off that I am concerned about the origin of these funds, which seem to come out of a Zurich bank account and to be vaguely connected with a Liechtenstein Anstalt. What do you want me to do about it?'' 
 The anecdotal information that the Law Society and others have made available to me suggests that, when those requests are made to NCIS, they do not receive a speedy reply. Those who are involved in the transaction are therefore in a difficult situation. They do not know whether to proceed with the transaction. Moreover, because of the tipping off regulations, they cannot even tell the client why the transaction is being held up. One solicitor described to me an incident in his firm: after four days of delay, and a problem in the property chain, the client got so angry that he kicked down the office door and punched the solicitor in the face. That seems to put a burden on the solicitor that is over and above the call of duty or even that which the Bill should impose on him. 
 How will the system work in practice? I am worried that, as my hon. Friend the Member for Surrey Heath (Mr. Hawkins) has said on several occasions, it will lead to a huge increase in the amount of information given to NCIS. As a result, it will become even more difficult to obtain a clear answer from NCIS about whether one should proceed with a transaction.

Ian Davidson: Given that the hon. Gentleman has just mentioned the hon. Member for Surrey Heath, will he clarify, first, where he is, secondly, when he is coming back, and thirdly, whether he will tell us, in great detail, what he had for lunch, whom it was with, what was said—

Bill O'Brien: Order. The hon. Gentleman may wish to answer that question, but the Committee should move on and stick to the agenda.

Dominic Grieve: I shall stick to the agenda, which I was doing before the hon. Gentleman's attempt to divert me into an interesting sideline, which I would have been happy to pursue, although I cannot do so.

Ian Davidson: You mentioned him.

Dominic Grieve: I mentioned my hon. Friend because he had previously raised the issue with the Minister. This is the correct opportunity for the Committee to discuss it.
 The Minister will also recollect that my hon. Friend raised the issue of the level of disclosures. Further information has been provided, but it was predicted in the NCIS lecture that, on current trends, disclosures in the coming year would rise from 18,000—a figure mentioned by the Minister—to well in excess of 30,000. It seems likely that that may be a result of the events of 11 September. Nevertheless, there has been an exponential rise in the number of people contacting NCIS about difficult transactions. 
 I hope that the Minister will accept that that is a serious issue for those who are trying to discharge professional obligations. They are happy to inform NCIS if they are troubled by a transaction, but they need a rapid response as to what they should do next. The criminalisation provisions of the tipping off clause 
 mean that they cannot tell their client what is going on, but they are prevented from carrying out a transaction that they are contractually bound to effect as quickly and correctly as possible. That is an onerous burden. I am not satisfied, on the basis of information given to me by those in the legal profession, including solicitors and the Law Society, that the system is operating well at the moment, and I am worried that it will not operate properly in view of the far greater number of disclosures that are likely to arise. 
 The amendment is probing. I want to have a discussion and debate on an important issue. I do not intend to delete the clause, and I hope that I made that clear through the rather odd way in which I drafted the amendment in the first place.

Bob Ainsworth: In answer to my hon. Friend the Member for Glasgow, Pollok, there is no need for the hon. Member for Beaconsfield to explain where his hon. Friend is. He will give us a version of where he has been and what he has been doing when he comes back, whether we want it or not.

Norman Baker: Will the Minister give way?

Bob Ainsworth: On that?

Norman Baker: Yes, on a related point. I noticed that the hon. Member for Glasgow, Pollok was temporarily sitting on the Conservative Benches. By delaying giving way, the Minister has allowed him to return to the Government Benches.

Bill O'Brien: Order. That is not helpful to the Committee.

Bob Ainsworth: On disclosures, I am informed that this year they rose to the kind of levels to which the hon. Member for Beaconsfield referred. NCIS tells us that, contrary to what the hon. Member for Surrey Heath said earlier, that was entirely due to the incidents of 11 September, the raised public awareness of such matters and the concern and alarm that followed. We cannot rely on that continuing in the future. I hope that there will not be further incidents of that kind, and that people can return to the way of life or the level of alertness and alarm—or lack of it—that they had previously.
 NCIS has been described previously as a dreadful Big Brother organisation, garnering information for no good purpose. I accept that we are not discussing terrorist measures—a separate Bill was introduced, which contained equivalent measures, in many instances, and applied them to terrorism—but the Committee is aware of the connections of organised crime to terrorism and so on. I therefore hope that it will be aware of the need for organisations such as NCIS. In an ideal world, not only would such organisations be nothing like the size of NCIS, they would not exist at all. However, none of us is naive enough to think that we live in an ideal world, and sadly there is a need for the kind of powers that we have given NCIS, and for the kind of resources that we have had to give it. 
 Hon. Members may find it helpful if I explain how the provisions in subsections (2) and (3) will work in 
 practice. We have not made any changes to the practice that currently operates by virtue of existing legislation, and the provisions closely follow our obligations under the European Community money laundering directive of 1991. 
 Clause 328 is directly linked to the prohibited acts in clauses 321 to 323. In essence, it provides a defence to the offence if someone's knowledge or suspicion about criminal property is reported to a constable, a Customs officer or their nominated officer. It requires a person to obtain the necessary consent before the transaction is processed. However, the provisions recognise that the person who is faced with a transaction, or who acquires or possesses criminal property, may not always have an opportunity to obtain prior consent before a transaction is processed or property acquired, and in that situation the person may proceed, but is required to report his knowledge or suspicion as soon as practicable to the relevant person. 
 When a person informs a nominated officer about his suspicions, the onus will lie on the nominated officer to decide whether to give consent to the transaction being continued or to report the matter to NCIS. If an employee reports his suspicions to a nominated officer, and that person fails to pass on those suspicions to NCIS, either before or after the transaction is processed, the nominated officer might find himself liable for the offence of being concerned in an arrangement that facilitates money laundering—or of failing to report the offence, if he is in the regulated sector. 
 The amendment would make the reporting of a transaction, prior to carrying out the prohibited act under clauses 321 to 323, rather pointless. All someone would need to do is to pick up the telephone and ring NCIS, and immediately afterwards process the transaction. 
 The provisions are meant to be an investigative tool and are designed, in the more serious cases, to give law enforcement an opportunity to take action against laundering before funds are dissipated. The amendment would mean that law enforcement would not have an opportunity to put a hold on an account pending further inquiries, or to obtain a restraint order against the funds. There are many instances in which there is no urgency to the case and suspicious transactions can be properly investigated before they are processed. When there is some urgency, the provisions allow for the transaction to be continued, and for a report to be made swiftly following that, as I have explained. 
 It has been claimed that a huge paper burden might be imposed on NCIS because of the expansion of the provisions. However, only 5 per cent. of reports are made prior to transactions. It is unsurprising that the hon. Gentleman has heard anecdotal evidence to the contrary. I am not saying that people are never inconvenienced—that cannot be completely avoided. I can only report to him what I have been told by NCIS. When a transaction is being held up, it is looked at within 24 hours; if it is reported early in the day, it is 
 looked at on the same day, with a view to assessing its priority. If it is judged not to be urgent, it might not be cleared on the same day. However, NCIS attempts to respond to the needs of people and believes that it is relatively successful in doing so and that this will continue when the Bill is enacted. 
 When a report is made before a transaction is conducted, law enforcement agencies need to make further inquiries. In most cases it is possible for the person making the report and the law enforcement agencies to reach an agreement on what may be said to the owner of the account or funds so that the reporting officer does not commit a tipping off offence. 
 The hon. Gentleman said that the amendment was probing, to tease out what the situation is, and I have tried to respond appropriately. The only point that I have not covered is the one about whether it is desirable for solicitors to be thumped. I hope that we do not put that to the vote, because I will happily vote with him on that occasion, but I am not sure that he will achieve unanimity from the Committee.

David Wilshire: I thought that I understood all this, and the amendment made a great deal of sense. I then thought that we could vote rapidly on it while the hon. Member for Glasgow, Pollok was on this side, so that we might get a few more votes than we usually do—but he did not stay long enough, and the moment has passed. However, the more I have listened and thought about it, the more confused I have become, so I would be grateful if either the Minister or my hon. Friend could sort me out.
 Subsection (2) says: 
''The first condition is that—
(a) the disclosure is made before the alleged offender does the prohibited act,''.
 I take this to mean that one picks up the telephone and says to a policeman or Customs officer, ''Hi, I'm going to break the law''. Well, some people may or may not do that, but what then concerns me is paragraph (b), and I believe that it makes sense to leave it out. Is anybody going to pick up the telephone and say, ''Excuse me, I'm about to break the law and please may I have your permission?''—because that is what I take it to mean. I cannot see a good reason why anyone would announce their intention to break the law and then say to the law enforcement agencies, ''That's alright with you, isn't it?''

Bob Ainsworth: Will the hon. Gentleman please read the title of the clause—''Authorised Disclosures''?

David Wilshire: I understand what the Minister is saying, but that does not help me. Whether or not it is an ''authorised disclosure'', or whatever other title one may wish to give it, I am still left mystified as to why it is suggested in legislation that would-be criminals announce their intention of breaking the law and then say, ''Is it alright with you, guv?''. If the title means what I think it does, having called to ask permission somehow or other authorises the action. That is an extraordinary suggestion.

Bob Ainsworth: I do not think that the hon. Gentleman is quite as obtuse as he is trying to make
 out. He knows that by picking up the telephone he is avoiding breaking the law.

David Wilshire: That is even better. I am even more confused. The longer this goes on, the worse it gets. If every time I pick up the telephone and say that I am about to do something that I should not, I am not breaking the law. That is a novel suggestion, and I think it lucky that the hon. Member for Glasgow, Pollok is not here or he would blow a fuse about the way in which this Government Bill seems to be relaxing its attempt to catch criminals by saying that they can pick up the telephone and suddenly become innocent. If the Minister cannot help me out, perhaps my hon. Friend can.

Mark Field: Underlying the whole issue of disclosure, and authorised disclosures in particular, is a very regrettable development, and I do not think there are any easy answers if we need to enact this money laundering legislation. It is regrettable that the whole ethos of a professional relationship will be entirely undermined. There will always be a suspicion in the back of any client's mind in a professional relationship, be it with a lawyer—notwithstanding the legal privilege—with accountants or with other financial services individuals. It will put professional advisers into an impossible position. They can pass on to the police any suspicions that they may have if a client suddenly appears with a spanking new car and wants to ensure that new accounts are opened, but they will not be able to tell the client, with whom they may have a long-standing relationship. I appreciate that, for the legislation to be workable, there must be some way in which professionals are made accountable.
 I hope that I have recognised in my various contributions to the debate on part 7 at least that there is a distinction between the everyday person in the street and those in the regulated sector. There must be a higher burden in the regulated sector for professionals, who cannot simply turn a blind eye to these matters. However, that will undermine the ethos of the professional relationship. There are many ex-lawyers, as I am, and ex-professionals in the Committee, at a time when there is an increasing questioning of professionals. As the vestiges of the professional relationship break down, the reputation of professionals will be diminished further as the years go by, which is regrettable. The amendment at least goes some way towards trying to rectify that, and I hope that the Minister will give it serious thought.

Dominic Grieve: I listened carefully to the Minister. I am glad that he accepted the point, but I am not entirely reassured that the system will get much better as a result of the vast number of authorised disclosures that he hopes will take place. If the Government's proposal is to work and disclosures are made before transactions take place, it is essential that the response is very quick. It is in NCIS's interest that that should be the case. The sort of transaction that will be of particular concern to it is the one in which a solicitor says that his client wishes to transfer £2 million to a bank in a country that has a reputation for being a haven for tainted money.
 That is an example of a transaction that escapes out of the jurisdiction and cannot be recovered. Obviously, the problem does not arise with the same force where a disclosure can be made subsequently. However, solicitors have a peculiar problem. Some of the stories that I was told had a humorous side, but there is a serious side, in that professional reputations are on the line, with a client who is metaphorically beating on the door and asking why his transaction is not going ahead. The solicitor is waiting to hear from NCIS whether he should say that he is not going ahead with the transaction without giving an explanation, or whether he should go ahead with it so that NCIS can follow it. The solicitor should not be left in limbo. 
 I hope that as a result of our discussions the Minister will take the opportunity to tell NCIS that the issue has caused concern. A delegation raised it with me, not just an individual solicitor. I therefore assume that unless it had been causing concern in the profession, it would have been dismissed as an isolated incident. I did not get that impression, although I may be mistaken, which is always possible. However, I got a clear impression that the profession at an official level regarded it as a potentially serious problem that had manifested itself on several occasions. I hope that NCIS and the Government can provide some reassurance that there will be rapid responses when disclosures are made.

Bob Ainsworth: I am told that that happens already. I do not know whether I said so earlier, but I am aware that NCIS officials met representatives of the Law Society recently and agreed to make a contribution to its training programme to ensure that this regulation is more fully understood. There is a framework for the Law Society and NCIS to work closely together to overcome the potential problems rightly raised by the hon. Gentleman.

Dominic Grieve: I am grateful to the Minister for that comment, and I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 328 ordered to stand part of the Bill.

Clause 329 - Interpretation

Dominic Grieve: I beg to move amendment No. 509, in page 190, line 28, after 'an', insert—
'indictable'.
 This is another way of approaching the issue that we discussed under the de minimis clause. A number of organisations suggested that criminal conduct should be confined to indictable offences, rather than any offence. This takes us back to the early stages of this legislation. However, I would be grateful for the Minister's comments on such a proposal, although I can foresee what he is likely to tell the Committee.

Mark Lazarowicz: On reading the terms of the amendment, I wonder whether the hon. Gentleman fully appreciates
 its consequences. As I see it, it would restrict criminal conduct to indictable conduct. Given that the proposed new section interprets criminal conduct for the purposes of that part alone, the effect of the amendment would surely be to restrict the exemptions available to officers of the law who undertake criminal acts as part of their normal duties. That would criminalise activity by law enforcement officers. We have already heard how the hon. Gentleman is soft on criminals, but being tough on law officers is perhaps going a bit too far.

Dominic Grieve: The brevity of my remarks in introducing the amendment reflected the fact that I could see, notwithstanding that perhaps I tabled it in a fit of enthusiasm at the behest of others, that it was not without some difficulty.

Mark Lazarowicz: I suggest that the hon. Gentleman should think more carefully before acting so quickly at the behest of others.

Dominic Grieve: Much as I would like throughout my life to follow the hon. Gentleman's counsels of perfection, I have learned in the course of debating in this Committee that it may occasionally be wiser to try to fire a blunderbuss than to try to shoot a bullet. I apologise for that, but I would not wish issues to go by default and not be considered, however briefly, if only for an inadequacy in the amendment to be pointed out. I prefer to be humbled by his comments than to feel that a part of the Bill has passed without adequate scrutiny. I am sure that the Minister's comments will echo the hon. Gentleman's, and that we can then move on to other business.

George Foulkes: The hon. Gentleman may have been able to predict the reply to his amendment, but he was not able to predict who would give it.
 As it is drafted, part 7 operates on the basis of the proceeds of any criminal conduct. No distinction is made between the proceeds of indictable offences or summary offences. As the hon. Gentleman is aware, this approach is consistent with that in parts 2, 3 and 4 in relation to the confiscation of proceeds following a conviction for a criminal offence. We believe that it is vital to have consistency across the Bill and that there should be no distinction between indictable or summary offences. 
 There are also real practical reasons why there should be no qualification to the type of offence caught by the provisions on money laundering. For example, at the stage at which a report would need to be made by someone in the regulated sector, he or she may suspect that the money used in a transaction was the proceeds of crime, without having any way of knowing the underlying predicate offence. The person would not know whether the initial offence that generated the laundered proceeds was an indictable or a summary offence. In addition, laundering the proceeds of a summary offence might be part of a larger pattern of other money laundering of which the person making the report was not aware. As we have said on many occasions, it is important that NCIS has as much information available to it as possible. 
 Restricting the reporting offence would limit the information that it receives. 
 As far as principal money laundering offences are concerned, the amendment would take us back to the position where having to identify the predicate offence to prove that money laundering was taking place acted as a barrier against successful prosecutions. That would be a negative step. We find it unacceptable in principle that the proceeds of some offences should effectively be exempt from the money laundering provisions. If conduct constitutes a criminal offence, as does summary as well as indictable conduct, we should also be able to prosecute the offender for laundering the proceeds of his or her crime or crimes. 
 As I have said, the classification of an offence is not the determining factor of whether proceeds are laundered. Even some summary offences can generate large amounts of proceeds and the Government cannot see any reason why those proceeds should not be caught by part 7. As the hon. Gentleman conceded, we rehearsed much of the argument in our debate on part 2, but it may be useful to repeat some helpful examples. Summary offences such as possession of video recordings of unclassified work for the purposes of supply, use of unlicensed premises for exhibition requiring a licence and offences relating to sex establishments can generate substantial proceeds. We cannot see any good reason why such proceeds should not be covered by part 7. 
 The Government are satisfied that the Bill as drafted adopts the right approach by applying the three principal money laundering offences to the proceeds of all crime, and I hope that the hon. Gentleman will withdraw the amendment. He hinted that he would do so when he moved it, and he is presumably even more intent on doing so having heard my convincing arguments.

Dominic Grieve: The Minister has persuaded me that the amendment is unnecessary, and indeed possibly counter-productive. I am grateful to him for having given a complete and clear exposition of why that is the case. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Nick Hawkins: I beg to move amendment No. 510, in page 190, line 39, leave out paragraph (c).
 As we discovered in Committee a week or so ago, the shortest amendments often elicit the greatest debate on matters of principle. This amendment is a case in point, because it goes to the issue of retrospection. Ministers or members of the Committee of any party will not be surprised to learn that there are concerns of principle about legislation having retrospective effect. I anticipate that the Minister will accuse us of being soft on money launderers. I will listen carefully to what he has to say on the special reasons why retrospection is justified in this case. Despite that, and the fact that I understand that he may have more of a case for retrospection in that field of law than in others, it would not be right to the let the matter go through 
 without at least discussing it, because it is rather like legal professional privilege. 
 Governments of all parties are always tempted to chip away at the traditional principle that provisions should not have a retrospective effect, and that is a danger. I am not making a partisan political point.

Vera Baird: Will the hon. Gentleman make it clear how the provision is an example of retrospective criminalisation? It does not matter whether the criminal property being dealt with has acquired its criminal status before or after the Bill has been enacted. In what sense does that retrospectively criminalise a person?

Nick Hawkins: I did not say, ''retrospectively criminalise''. Unusually for her, the hon. Lady misquotes me. I said that parliamentarians of all parties should be worried when part of a Bill can have a retrospective effect. One of the interesting things about the provision, as she has rightly identified, is that it refers to what happened to the property, rather than, as she would put it, retrospectively criminalising people.
 We have debated the problem of cut-off times on previous occasions, and while it would be out of order to repeat our debates, I will touch on them briefly. My hon. Friend the Member for Spelthorne (Mr. Wilshire) gave a hypothetical example about property that had belonged to one of his now deceased relations, which had long ago been the subject of crime. The hon. Member for Glasgow, Pollok, who is sadly not with us at the moment, went into flights of fancy about property that may once have been the proceeds of crime and ended up on the Scottish borders in the hands of the ancestors of my hon. Friend the Member for Beaconsfield. There must be clear signs of where the line is drawn. It might be possible to say that it is immaterial whether the property was the proceeds of crime before or after the Bill was enacted and we have no defined cut-off point. 
 Let us suppose that some of the proceeds of criminal activity that took place 25 years ago or longer was not recovered at the time. An example could be the great train robbery, or the Brink's-Mat robbery. What if some of those proceeds of crime were to turn up now? Where is the cut-off point? It is that type of retrospection that we must be careful about.

Paul Stinchcombe: Would the amendment change the criminal character of any criminal property, bearing in mind subsection (3)? If it would not, the purpose of subsection (4)(c) is to clarify the case.

Nick Hawkins: As he so often does, the hon. Gentleman has touched on an important matter. It would have been possible for my hon. Friend the Member for Beaconsfield and myself to try to change any part of the Bill that might have dealt with timing. Certainly, I considered whether a consequential amendment to subsection (3) was needed. We did not say that our amendment was perfect. Indeed, neither of us would say that any of our amendments were perfect, although a couple of them—now known to members of the Committee as the Grieve amendment and the Hawkins amendment—cannot have been that bad, because the Government accepted
 them. Most of the time, we do not place any great faith in our drafting skills, but we want to be able to raise significant issues. The Government could say, ''We accept that point, but we wish to amend subsection (3) as well.''

Ian Lucas: My hon. Friend asked why this is a significant issue. He said that the deletion would have no effect.

Nick Hawkins: No, I think that the hon. Member for Wellingborough (Mr. Stinchcombe) said that removing subsection (4)(c) would have no effect because of the form of subsection (3). However, the hon. Members for Wellingborough and for Wrexham (Ian Lucas) will accept that we do not mind whether subsections (3) and (4) would need amending.

Paul Stinchcombe: Does the hon. Gentleman accept that his amendment has no effect at all?

Nick Hawkins: No, I do not. We often table amendments to raise an issue. That is the Committee's purpose. We do not say that our drafting is perfect, but we felt that suggesting the deletion was a simple and clear way in which to raise the issue. I have set out our case, and I will listen to what the Minister says. I anticipate that interesting issues will be raised by the question of what retrospectivity is.

George Foulkes: I do not think that we are talking about a retrospective effect in the way that the hon. Gentleman claims. I hope that I can convince him of that.
 As currently drafted, the legislation provides that it is does not matter whether criminal conduct took place before or after the passing of the Bill. It would be quite impractical to apply part 7 to only proceeds that were acquired through conduct that was committed after the Bill came into force. That would mean that the Bill would have no effect for many years, and it would create uncertainty about the status of the present law, which also catches conduct committed prior to the date on which the relevant provisions in the Drug Trafficking Act 1994 and the Criminal Justice Act 1988, as amended by the Criminal Justice Act 1993, were brought into force. 
 I emphasise that the way in which subsection (4)(c) is drafted does not mean that the actual principal offences or the failure to report an offence may be retrospective. Those offences can be committed only if the laundering occurs, or the actual knowledge or suspicion for reporting purposes is formed, after the Bill comes into force. The subsection does, however, mean that a person who committed an acquisitive crime before or after the Bill comes into force, and who then launders the proceeds of that crime after the legislation has been commenced, or who fails to report his suspicions after the commencement, will commit an offence under clauses 321 to 324. Hon. Members will agree that that is sensible. 
 In order to commit a money laundering offence, a person must know or suspect that property is the 
 proceeds of crime. If the person has that suspicion, he should stop any dealings with it, regardless of how long ago the offence was committed. I hope that that convinces the hon. Member for Surrey Heath. 
 The construction of the offences, which replicates the approach taken in existing legislation, is fully compatible with the European convention on human rights. Article 7 of the ECHR requires that there shall be no punishment without law. However, in order to commit a money laundering offence, a person must do something in addition to the original crime that generated the proceeds. People who have already generated proceeds from criminal conduct will have time to become aware of the provisions of part 7 before they come into force. They will be able to take steps to ensure that they do not commit a money laundering offence. 
 In view of that explanation of the operation of part 7, I hope that the hon. Gentleman will withdraw the amendment.

Nick Hawkins: I anticipated that the Minister would take such a line and at this stage—and only at this stage—I am willing to withdraw the amendment. However, he may have to be a little cautious because some issues may yet be raised by much more expert lawyers in another place. From reading their debates, I know that any issues that touch on even the slightest retrospection always cause Law Lords grave concern. I am not sure that he is completely off the hook in the long term, but for now I am prepared to say that I concede some faults.
 I know that the Minister would recognise from the intervention of the hon. Member for Redcar that the measure was not retrospective in the full sense, but we thought that that such matters were worth raising. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Amendments made: No. 286, in page 190, line 40, leave out 'or a pecuniary advantage'. 
 No. 287, in page 190, line 41, at end insert— 
'(5A) If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage.'.
 No. 288, in page 191, line 4, leave out 'or pecuniary advantage'.—[Mr. Bob Ainsworth.]

George Foulkes: I beg to move amendment No. 289, in page 191, line 6, leave out subsection (8) and insert—
'(8) Property is all property wherever situated and includes— 
 (a) money; 
 (b) all forms of property, real or personal, heritable or moveable; 
 (c) things in action and other intangible or incorporeal property.'.
 The amendment is technical. It will have no effect on what is meant by property under part 7. Its purpose is to avoid unnecessary confusion if the definition under part 7 is compared with the definitions of property under parts 6 and 8. 
 Amendment agreed to. 
 Amendments made: No. 267, in page 191, line 19, leave out 'but excluding a lease which is not a long lease'.—[Mr. Foulkes.] 
 No. 514, in page 191, line 30, at end insert— 
'(10A) For the purposes of a disclosure to a nominated officer— 
 (a) references to a person's employer include any body, association or organisation (including a voluntary organisation) in connection with whose activities the person exercises a function (whether or not for gain or reward), and 
 (b) references to employment must be construed accordingly.'—[Mr. Bob Ainsworth.]
 Clause 329, as amended, ordered to stand part of the Bill.

Anne McGuire: I beg to move, That further consideration be now adjourned.

David Wilshire: I believe that this is a debatable motion. I am not about to do anything silly, but I want
 to put on record that there could have been a guillotine a sitting and three quarters ago that would not have enabled us to have such discussions. It would be churlish not to say that it was helpful of Labour Members to make that possible, given that such discussions were worth having. I hope that they were taken in the spirit in which they were meant. I am not conscious of time wasting, other than if that means raising matters that people did not want to hear. Genuine points were made and I wanted to say, on behalf of colleagues, that I appreciate the courtesy that has been shown to us to enable us to reach this part of the Bill.
 Question put and agreed to. 
 Adjourned accordingly at twenty-two minutes to Five o'clock till Tuesday 29 January at half-past Ten o'clock.